Correlation Between Provident Agro and Era Mandiri
Can any of the company-specific risk be diversified away by investing in both Provident Agro and Era Mandiri at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Provident Agro and Era Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Provident Agro Tbk and Era Mandiri Cemerlang, you can compare the effects of market volatilities on Provident Agro and Era Mandiri and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Provident Agro with a short position of Era Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Agro and Era Mandiri.
Diversification Opportunities for Provident Agro and Era Mandiri
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Provident and Era is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Provident Agro Tbk and Era Mandiri Cemerlang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Era Mandiri Cemerlang and Provident Agro is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Provident Agro Tbk are associated (or correlated) with Era Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Era Mandiri Cemerlang has no effect on the direction of Provident Agro i.e., Provident Agro and Era Mandiri go up and down completely randomly.
Pair Corralation between Provident Agro and Era Mandiri
Assuming the 90 days trading horizon Provident Agro Tbk is expected to generate 0.58 times more return on investment than Era Mandiri. However, Provident Agro Tbk is 1.71 times less risky than Era Mandiri. It trades about -0.01 of its potential returns per unit of risk. Era Mandiri Cemerlang is currently generating about -0.02 per unit of risk. If you would invest 44,000 in Provident Agro Tbk on November 5, 2024 and sell it today you would lose (5,400) from holding Provident Agro Tbk or give up 12.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Provident Agro Tbk vs. Era Mandiri Cemerlang
Performance |
| Timeline |
| Provident Agro Tbk |
| Era Mandiri Cemerlang |
Provident Agro and Era Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Agro and Era Mandiri
The main advantage of trading using opposite Provident Agro and Era Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Agro position performs unexpectedly, Era Mandiri can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Era Mandiri will offset losses from the drop in Era Mandiri's long position.| Provident Agro vs. Dharma Satya Nusantara | Provident Agro vs. Salim Ivomas Pratama | Provident Agro vs. Sawit Sumbermas Sarana | Provident Agro vs. Austindo Nusantara Jaya |
| Era Mandiri vs. Putra Rajawali Kencana | Era Mandiri vs. Sinergi Inti Plastindo | Era Mandiri vs. Karya Bersama Anugerah | Era Mandiri vs. Jasnita Telekomindo Tbk |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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